eBusiness Weekly
Business Writer
The Industrial Development Corporation (IDC) has sold its 15 percent stake in Scaw Metals Group’s Grinding Media, South Africa, to a United States of America firm, Magotteaux International as it seeks to cut spiralling losses.
Scaw Metals owns Haggie Rand in Zimbabwe. Haggie Rand is one of the oldest companies in Zimbabwe having been established in 1921 to produce and supply wire ropes in Southern Africa.
The company has factories in South Africa, Zimbabwe and Zambia producing high carbon wire and strand, steel wire ropes, fibre products and twines.
Because of regulatory processes in Zimbabwe, the transaction has since been approved by the local Competition and Tariff Commission.
CTC said in a statement released on April 3: “Please be advised that the examination of the transaction involving the acquisition of 15 percent shareholding in Grinding Media South Africa (Pty) Ltd by Magotteaux International S.A was finalised and the Commission approved the acquisition without conditions.
In 2012, IDC acquired a controlling interest in Scaw Metals and related businesses from Anglo American for R966 million (net of debt) to, among others, preserve manufacturing capacity of steel in South Africa.
Since acquiring the controlling stake, the performance of the business is understood to have deteriorated materially, resulting in the IDC funding operational losses and capital expenditure, increasing the IDC exposure to R5,4 billion.
However, in order to stabilise the business and set the company on a new growth trajectory, the IDC commissioned a feasibility study to assess whether the businesses could operate as standalone entities, with the aim of ultimately introducing Strategic Equity Partners into each of the businesses.
After the completion of the feasibility studies in October 2015, IDC issued a tender for expression of interests, which were followed by the receipt of non-binding offers from interested parties.
Selected parties were invited to undertake a due diligence exercise, following which strong offers were submitted that were presented to the IDC governance committees in August 2016.
